Gold may be trading at more than $1,050 (U.S.) an ounce, but the world’s largest bullion producer is slashing its corporate work force by 16 per cent in a bid to cut costs.
Barrick Gold Corp. said late yesterday it is eliminating 80 jobs, most of them at the company’s head office in Toronto.
Rookie chief executive officer Aaron Regent ordered an internal review of Barrick’s organizational structure in July and the layoffs are the result of that process, said company spokesman Vince Borg.
Barrick is firing workers despite the record gold price, which has soared dramatically in recent weeks above $1060 an ounce because of the slumping U.S. dollar.
“When you do a review, you shouldn’t only look at the price of the product. You can’t determine the gold price as a factor. Gold prices are good, but the guys internally did a pretty thorough review and identified a number of positions and functions and came forward with the recommendations and everybody said it made sense,” Mr. Borg said.
Most of the job cuts will be in finance and mining technical support. The internal review found several significant areas of overlap, the company said. The restructuring will give more responsibility and accountability to Barrick’s regional operations and executives.
Barrick said the staff reductions will result in cost savings of “at least” $50-million per year, once they are fully implemented.
The Toronto company, founded by its colourful chairman, Peter Munk, will take a charge of about $30-million in relation to costs associated with the job cuts.
Barrick began laying off employees last week. It expects to complete the job cuts within six months.
“This organizational review was initiated to look for ways in which we could improve how we are managing the company and better position us to maximize the value of our asset base and secure growth opportunities,” Mr. Regent said in a statement.
“When these decisions are fully implemented, we expect to achieve significant savings and our decision-making and execution capabilities will be meaningfully enhanced.”
Mr. Regent took over the top job at Barrick in January of last year after his predecessor, Greg Wilkins, was forced to step aside for health reasons.
Under Mr. Regent’s guidance, Barrick recently completed a $4-billion equity issue, which was the largest stock sale in Canadian history. It has also raised more than $1-billion by selling debt.
The proceeds of the financings are being used to eliminate Barrick’s notorious hedge book, which hurt profit by locking in the price the company received for some of its gold production at prices far below current levels.
In addition to its hedge book, Barrick has struggled to increase its production and reduce costs. Last week, it struck a $465-million deal to buy a 70-per-cent stake in the El Morro copper and gold project in Chile.
The company has about 20,000 employees worldwide at 26 mine sites in North America, South America, Africa and Australia.
Barrick (ABX-TSX)
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